Lease Renewal Requires Mutual Agreement on Rent; Failure to Agree Results in Termination by Efflux of Time

The Applicants (Lessors) executed a registered lease deed on 14.04.1966 in favor of 'Raja Steel Industries' for 35 years at Rs.150/month

The Respondent later acquired leasehold rights via a Deed of Assignment in 1994

The lease expired on 13.04.2001

A renewal clause allowed for a further 35 years provided the lessee gave three months' notice and the parties "mutually agreed" on fresh rent

Although the Respondent expressed a desire to extend the lease in December 2000, no mutual agreement on rent was reached; the Applicants proposed an increased rent of Rs. 1,65,000/month, which was not accepted

The Trial Court decreed eviction, but the District Court (Appellate Court) set it aside, holding the lease stood automatically extended

During the pendency of the Revision, the Respondent inducted a third party into the premises via a leave and license agreement despite a court injunction

1. Whether the lease stood automatically extended for a further period of 35 years in the absence of a mutual agreement on rent.

2. Whether the Respondent's continued possession after the expiry of the lease constituted "tenant holding over" under Section 116 of the Transfer of Property Act.

3. Whether the Respondent committed contempt of court by parting with possession of the suit premises during the pendency of the revision.

Section 111(a) of the Transfer of Property Act, 1882, regarding the determination of lease by efflux of time

Section 107 of the Act, which requires leases of more than one year to be made by registered instruments

The principles of "tenant holding over" under Section 116, requiring the lessor's assent for such status

The standard of revision under Section 115 of the CPC as clarified in Hindustan Petroleum Corporation Limited v. Dilbahar Singh, allowing intervention where findings are based on perverse interpretation of documents

The Court found the Appellate Court's interpretation of the lease deed perverse, as the deed explicitly made "mutual agreement on rent" a condition precedent for extension.

Since no such agreement occurred, the lease expired by efflux of time on 13.04.2001.

The Court rejected the "holding over" argument, noting that the Applicants' letters (proposing high rent or stating the lease had expired) did not constitute "assent" to the Respondent's continued stay; rather, the Respondent became a "tenant at sufferance".

Regarding the contempt, the Court analyzed the 2021 leave and license agreement and concluded that granting "exclusive possession" to a licensee constituted "parting with possession," directly violating the interim injunction order dated 08.02.2016.

The Court restored the Trial Court’s eviction decree, directing the Respondent to handover vacant possession within 8 weeks; it found a prima facie case for contempt and directed the Registry to issue notice under the Contempt of Courts Act, while granting liberty to apply for mesne profits.